[Congressional Record Volume 143, Number 18 (Wednesday, February 12, 1997)]
[Extensions of Remarks]
[Page E223]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     INVESTMENT COMPETITIVENESS ACT

                                 ______
                                 

                          HON. PHILIP M. CRANE

                              of illinois

                    in the house of representatives

                      Wednesday, February 12, 1997

  Mr. CRANE. Mr. Speaker, today I am introducing the Investment 
Competitiveness Act along with my colleagues, Ms. Dunn and Mr. 
McDermott. In a nutshell, this legislation is designed to encourage 
additional foreign investment in the United States by eliminating a tax 
that we impose on foreigners only when they invest in the United States 
through a U.S. mutual fund. As chairman of the Ways and Means 
Subcommittee on Trade, I view this tax issue from the trade 
perspective--we ought not be setting up artificial barriers to trade or 
investment, particularly when others do not require the same of us. 
Such a policy is not only contrary to basic free market principles, but 
leaves us with a tax policy that discourages foreign investment in the 
United States through mutual funds--meaning the money goes elsewhere. 
Our ability to encourage foreign investment in U.S. securities will 
help lower capital costs and interest rates here at home. That means 
that money will be more easily available for entrepreneurs to create 
and expand business opportunities, meaning more job creation in the 
United States.
  Under present law, most kinds of interest and short-term capital 
gains received directly by a foreign investor or received through a 
foreign mutual fund are not subject to the 30 percent withholding tax 
on investment income. However, interest and short-term capital gain 
income, when received through a U.S. mutual fund, are subject to the 
withholding tax. Without getting into too much detail on the technical 
aspects of the bill at this time, I would simply say that this 
legislation would modify the tax treatment of income received by a 
foreign investor through a U.S. mutual fund so as to make it generally 
comparable to the tax treatment of the same income when received 
directly or through a foreign mutual fund.
  Mr. Speaker, I believe this legislation makes good sense both from a 
tax and trade policy perspective, and I urge my colleagues to lend 
their support.

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